Legal Question in Business Law in Pennsylvania

liabilities and responsibilities of LLC partners

If two out of five members of an LLC cease any and all contact with the other three and then enter into a business relationship with a client in which the existing LLC was already contractually doing business with, and ultimately cause the LLC to lose their client and subsequent income from that client by striking their own deal with that client to provide the same services already negotiated by and with the LLC, are the two ''parting'' members liable for the loss of income suffered by the LLC and are the two ''parting'' members liable for debts remaining with the LLC, with whom they are still legally bound to, even though they have stopped participating in the LLC? In addition, are the remaining three partners entitled to future income they would have gotten from the client in question had the two parting members not interfered?


Asked on 4/22/02, 5:13 pm

3 Answers from Attorneys
Piyush Seth Seth Law Offices

Re: liabilities and responsibilities of LLC partners

To answer this question one has to look at the operating agreement of the LLC. In addition there may be some fiduciary duty or responsibility depending on the details of the situation.

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Answered on 4/22/02, 6:26 pm
Geoffrey G. Gussis, Esq. Riker, Danzig LLP

Re: liabilities and responsibilities of LLC partners

It sounds like there has been a violation of fiduciary responsibilities here. The Operating Agreement should control to some degree here but, just as in a corporation, members of LLCs can't usurp corporate opportunities for themselves that were properly for the LLC as a whole. With that said, there may be ways for an LLC member to withdraw from the LLC, end the relationship and then proceed on an even playing field with competition. What does the Operating Agreement say?

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Answered on 4/22/02, 7:44 pm
Walter LeVine Walter D. LeVine, Esq.

Re: liabilities and responsibilities of LLC partners

ASIDE FROM ANY REMEDIES UNDER THE LLC OPERATING AGREEMENT, THERE MAY BE CLAIMS FOR TORTIOUS INTERFERENCE WITH BUSINESS RELATIONSHIPS, BREACH OF FIDUCIARY RESP0NSIBILITY (THEY WERE FIDUCIARIES TO THE OTHER LLC MEMBERS), ECONOMIC INTERFERENCE, AMONG OTHERS. IN MOST INSTANCES, FORMER BUSINESS PARTNERS HAVE CONTINUING RESPONSIBILITY NOT TO INTERFERE WITH ON-GOING BUSINESS RELATIONSHIPS INVOLVING THEIR FORMER OR CURRENT BUSINESS AND ITS CUSTOMERS. YOU MAY BE ABLE TO GET INJUNCTIVE RELIEF AND MONEY DAMAGES. I SUGGEST YOU PROMPTLY CONTACT A LOCAL ATTORNEY FAMILIAR WITH THESE MATTERS AND TAKE APPROPRIATE ACTION, INCLUDING ALL NECESSARY SUITS.

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Answered on 4/24/02, 9:57 am


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